The BBC's Peter Morgan: "Glitches are inevitable"

The work began immediately after Thursday's announcement of the conversion rates for the national currencies into the euro.

Banks have to be ready when the first euro cheques will be written on Monday, 4 January

While most people were getting ready for New Year parties, some 50,000 central bankers, share brokers, investment fund managers, commercial bankers, currency dealers and bond traders began to convert all accounts into euros and check that their computer systems can handle the new currency.

Three days

They have just three days to get the job done. When Asia's financial markets resume trading on Monday morning, 4 January 1999, their systems must work. If they fail, the new year will begin with economic mayhem.

The task is enormous.

• Every share price of every single company listed in the eurozone has to be recalculated.
• The foreign exchange markets must redenominate billions of euros worth of currency transactions.
• The total government debt of the whole 11-country euroland, i.e. government bonds and treasury papers, and all corporate debt has to be transferred to euros.
• Millions of accounts in francs, guilders, Deutschmarks, schillings and other currencies have to be converted.
• And finally, many banks in the eurozone transfer their own business into euros and therefore have to recalculate their books and all historical data in their ledgers.

Balancing the books in Frankfurt on the last day of trading in Deutschmarks

The tricky bit is that they all depend on each other. If a bank, a fund manager or a trader gets it wrong, their business partners and especially their customers and investors will suffer.

David Clementi, deputy governor of the Bank of England: "The markets are well-prepared"

David Clementi, deputy governor of the Bank of England, says it "would be surprising if it was entirely trouble-free". But he points out that Europe's financial industry has prepared some three years for this event.

Getting ready

The change-over to the euro has been carefully prepared. All big banks have conducted several real-time rehearsals. Now that E-day has come, some banks are working 24 hour shifts and have booked hotel rooms to keep vital staff nearby. Catering has been organised and for once restaurants in Europe's financial districts are open during a weekend.

In the City, bond traders at Barclays Bank convert their eurozone accounts

In Brussels, at the headquarters of Euroclear, one of the international organisations overseeing payments on the bondmarkets, technicians and bankers toasted the New Year surrounded by piles of flowcharts and computer printouts. Pierre Slechten, Euroclear's managing director, said: "This is the most important weekend for us ... it's the fulfillment of four years of work."

London's City is getting ready to, as it is the continent's financial centre:

• Its stock market is more than twice as big as Frankfurt or Paris,
  
• its foreign exchange operation is the world leader with 32% of the market,
  
• its share of international bank lending is 20%, and
  
• more than half of Europe's investment funds are managed in the City with investments worth more than $600bn at stake.

Converting the computer systems, especially the payment systems, is the greatest problem. During the past year all financial and accounting software was adapted to cope with the new currency, and special programmes have been written to help with the change-over.

At very small finance houses simple calculators may do the job. Big companies like Mercury Asset Management, for example, are using more sophisticated instruments as they have to recalculate around $170bn worth of assets.

Dangers

The rehearsals for the conversion weekend may have gone well, but once the hundreds of different accounting systems used by numerous banks and financial markets begin talking 'euros' to each other, failures are bound to occur.

David Clementi says that the Bank of England will carefully monitor the situation: "It is possible that we shall have problems on Monday, that later in the week we will find some failed trades, some payments that were sent to the wrong banks ... everybody is alert for that."

While others celebrated, Europe's bankers set out to work

If traders get it wrong their banks will have to pay the price, but the whole system could suffer. Any misunderstanding will be like a stone thrown into a lake, sending ripples across the water.

Only real-life trading will show whether the conversion to the euro will run as smooth as promised.